Q&As

A sole trader's business bank account contains monies used as working capital for their business, with a fluctuating balance. How would that account be treated by the court in financial remedy proceedings?

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Produced in partnership with Chris Bryden of 4 King’s Bench Walk
Published on LexisPSL on 02/08/2019

The following Family Q&A Produced in partnership with Chris Bryden of 4 King’s Bench Walk provides comprehensive and up to date legal information covering:

  • A sole trader's business bank account contains monies used as working capital for their business, with a fluctuating balance. How would that account be treated by the court in financial remedy proceedings?

It is common for a party in financial remedy proceedings to receive their income on a self-employed basis as a sole trader. This means that rather than a separate legal personality, such as a company being the income-generating vehicle, with personal income received by way of salary and dividends, the individual trades under a style or their own name and pays personal income tax on their profits. Business expenses are deducted in the usual way and accounts are normally prepared for this purpose. Some sole traders will simply use their personal bank account for income and expenses; others will use a dedicated business account.

In financial remedy proceedings the task of the court pursuant to section 25 of the Matrimonial Causes Act 1973 is to divide the assets between the parties in such a way as is fair in all of the circumstances having regard to the factors set out in that section. The starting point is equality of the division of assets subject to adjustments to reflect need, compensation and sharing, as set out in the case law culminating with the House of Lords decision in Miller v Miller

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